CHUA V ABSOLUTE MANAGEMENT CORPORATION

12. BETTY T. CHUA, JENNIFER T. CHUA-LOCSIN, BENISON T. CHUA, and BALDWIN T.
CHUA, petitioners vs. ABSOLUTE
MANAGEMENT CORPORATION and COURT OF APPEALS, respondents<.
G.R. No. 144881; October 16, 2003; CARPIO, J.;
TOPIC: Duty of court in the inventory process
FACTS: Betty T. Chua, the wife of deceased Jose L. Chua, was appointed as administratrix of the intestate estate of the deceased.
She submitted to the trial court an inventory of all the real and personal properties of the deceased. One of the creditors of the
deceased, respondent Absolute Management Corporation (Absolute), filed a claim on the estate (P63,699,437.74) which was
tentatively accepted by Betty. In the interim, Absolute noticed that the deceased’s shares of stocks with Ayala Sales Corporation and
Ayala Construction Supply, Inc. were not included in the inventory of assets. As a consequence, it filed a motion to require Betty to
explain why she did not report these shares of stocks in the inventory. Betty alleged that these shares had already been assigned
and transferred to other parties prior to the death of her husband. She attached to her reply the deeds of assignment which allegedly
constituted proofs of transfer. The trial court accepted the explanation as meritorious. Absolute, suspecting that the documents
attached were spurious and simulated, filed a motion for the examination of the supposed transferees based on Section 6, Rule 87,
Revised Rules of Court. Section 6, Rule 87 of the Rules of Court provides:
SEC. 6. Proceedings when property concealed, embezzled, or fraudulently conveyed. — If an executor or administrator,
heir, legatee, creditor, or other individual interested in the estate of the deceased, complains to the court having jurisdiction
of the estate that a person is suspected of having concealed, embezzled, or conveyed away any of the money, goods, or
chattels of the deceased, or that such person has in his possession or has knowledge of any deed, conveyance, bond,
contract, or other writing which contains evidence of or tends to disclose the right, title, interest, or claim of the deceased,
the court may cite such suspected person to appear before it and may examine him on oath on the matter of such
complaint; and if the person so cited refuses to appear, or to answer on such examination or such interrogatories as are put
to him, the court may punish him for contempt, and may commit him to prison until he submits to the order of the court.
The interrogatories put to any such person, and his answers thereto, shall be in writing and shall be filed in the clerk’s
office.
The RTC denied the motion, ruling that Absolute was, in effect, seeking to engage in a fishing expedition for evidence to be used
against the administratrix and others whom it seeks to examine, it being the consensus of the Court that the Rules of Procedure does
not allow the fishing of evidence to use against the adverse party. Aggrieved, Absolute filed a petition for certiorari and mandamus
with the CA alleging that the trial court deprived it of the right to show that the documents presented by petitioners were fictitious to
the prejudice of Absolute. Absolute obtained a favourable judgment, the CA setting aside the trial court’s order and pointed out that
the presentation of the deeds of assignment executed by the decedent in petitioners’ favor does not automatically negate the
existence of concealment; that it is a common occurrence in estate proceedings for heirs to execute simulated deeds of transfer
which conceal and place properties of the decedent beyond the reach of creditors. Hence, this petition.
ISSUE: What are the duties of court in the inventory process?
RULING: The court which acquires jurisdiction over the properties of a deceased person through the filing of the corresponding
proceedings has supervision and control over these properties.
1. The trial court has the inherent duty to see to it that the inventory of the administrator lists all the properties, rights
and credits which the law requires the administrator to include in his inventory.
2. In compliance with this duty, the court also has the inherent power to determine what properties, rights and credits of
the deceased the administrator should include or exclude in the inventory. An heir or person interested in the properties
of a deceased may call the court’s attention that certain properties, rights or credits are left out from the inventory.
3. In such a case, it is likewise the court’s duty to hear the observations of such party.
4. The court has the power to determine if such observations deserve attention and if such properties belong prima facie
to the estate.
However, in such proceedings, the trial court has no authority to decide whether the properties, real or personal, belong to the
estate or to the persons examined. If after such examination there is good reason to believe that the person examined is keeping
properties belonging to the estate, then the administrator should file an ordinary action in court to recover the same. Inclusion of
certain shares of stock by the administrator in the inventory does not automatically deprive the assignees of their shares. They have
a right to be heard on the question of ownership, when that property is properly presented to the court. In the present case, some of
the transferees of the shares of stock do not appear to be heirs of the decedent. Neither do they appear to be parties to the intestate
proceedings. Third persons to whom the decedent’s assets had been conveyed may be cited to appear in court and examined under
oath as to how they came into possession of the decedent’s assets.
In case of fraudulent conveyances, a separate action is necessary to recover these assets. Taken in this light, there is no
reason why the trial court should disallow the examination of the alleged transferees of the shares of stocks. This is only for
purposes of eliciting information or securing evidence from persons suspected of concealing or conveying some of the
decedent’s properties to the prejudice of creditors. Hence, the CA correctly ordered the trial court to give due course to
Absolute’s Motion for Examination. Petitioners’ admission that these persons are the decedent’s assignees does not automatically
negate concealment of the decedent’s assets on their part. The assignment might be simulated so as to place the shares beyond the
reach of creditors. In case the shares are eventually included in the estate, this inventory is merely provisional and is not
determinative of the issue of ownership. A separate action is necessary for determination of ownership and recovery of
possession. x x x Although as a creditor, Absolute does have the remedy of filing another case to recover such properties, its Motion
for examination was intended merely to investigate and take testimony in preparation for an independent action. Aside from the
administratrix and the heirs of the decedent, Absolute also sought to examine the supposed assignees of the decedent’s shares, who
are third persons with respect to the probate proceedings. The Motion was a preparatory move sanctioned by the Rules of Court.
The petition was dismissed.

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12. BETTY T. CHUA, JENNIFER T. CHUA-LOCSIN, BENISON T. CHUA, and BALDWIN T.

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